NIA - The Nuclear Industry Association - Financing of nuclear new build decommissioning

Financing of nuclear new build decommissioning

DEPARTMENT FOR BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2008/040) issued by The Government News Network on 22 February 2008

New nuclear power station operators will be required by law to set aside money from day one of generating electricity for their eventual decommissioning and waste costs, Business Secretary John Hutton made clear today.

Draft guidance published today sets out how clauses in the Energy Bill requiring operators of new nuclear power stations to meet the full cost of decommissioning and their full share of waste management costs would work.

Companies would be required to:

* Demonstrate detailed and costed plans for decommissioning, waste management and disposal, before they even begin construction of a nuclear power station;

* Set money aside into a secure and independent fund from day one of generating electricity; and

* Have additional security in place to supplement the Fund should it be insufficient, for example, if the power station closes early.

In ensuring these safeguards, the Secretary of State will draw on expert advice from the soon to be established Nuclear Liabilities Financing Assurance Board.

Mr Hutton said:
"Last month I invited energy companies to bring forward proposals for new nuclear power stations and we are already taking steps to facilitate this. It is in the national interest that the energy industry is able to invest in secure low carbon energy sources.

"But it is also in the national interest that we take every step to ensure that the taxpayer is protected from the clean up costs down the line. The Energy Bill and the guidance published today make clear that companies are liable by law to meet their full costs.

"Let me be clear - full means full. Funds will be sufficient, secure and independent, it will be a criminal offence not to comply with the approved arrangements and we are taking powers to guard against unforeseen shortfalls."

The draft guidance, published for consultation, will assist businesses in understanding their obligations under the Energy Bill, and what is required for a Funded Decommissioning Programme to gain approval.

Included is an indicative timeline by which the Government expects to publish its updated estimates of the costs of decommissioning and managing and disposing of the waste from new nuclear power stations, and therefore be in a position to set a fixed unit price for disposal of intermediate level waste and spent fuel. This fixed unit price will be set at a level over and above expected costs and will include a significant risk premium, to provide the taxpayer with material protection.

We consider that a decision by an operator to proceed in principle with building a new nuclear power station and therefore to request from the Government a fixed unit price for waste disposal in a Geological Disposal Facility could come as early as mid 2009.

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